Small-business owners ask NY to reject $15 minimum wage plan
Source: AP
ALBANY, N.Y. (AP) Small-business owners are striking back against New York Gov. Andrew Cuomo's plan to implement a $15 minimum wage, which would be the highest state minimum in the country.
Business owners from around New York gathered at the Capitol in Albany on Tuesday to urge lawmakers to reject Cuomo's proposal. A vote is expected in coming weeks.
They say the wage increase would devastate the state's economy by raising prices and reducing employment.
Read more: http://bigstory.ap.org/article/1b71d6b2037c41388f7547eb87358d11/small-business-owners-ask-ny-reject-15-minimum-wage-plan
dogman
(6,073 posts)Who do they cry to when their other business costs rise? Those costs offer a lot less return on investments. The fog of greed is hard to see past.
Plucketeer
(12,882 posts)Imagine a GIANT towering Ghost Town. The New Detroit!
How can people be so damned ignorant?
davidthegnome
(2,983 posts)In Maine, there's a bill to raise it to 12 over the next few years. A former Boss of mine was telling me that she would have to reduce staff and inventory in order to pay for it. There is also a proposed wage increase for waitresses, waiters - people who earn most of their money through tips, etc. I am completely in favor of raising both. It's past time.
I suspect some of these small business owners could manage it easily enough, but don't want the wage increase cutting into their profits. However, particularly in areas and businesses where the profit margin is pretty low, we might see some difficulties. I haven't crunched their numbers myself, so I don't know just how much impact an increased minimum wage would have on these employers.
Overall, I'd say it's a pretty complex process. I don't know what (if anything) is being proposed in tax incentives or other things to encourage employers and small businesses to go along with this. It does need to be considered though, particularly for small businesses that are barely hanging on - how they will afford to keep going, keep their employees, maintain their business expenses... and raise wages.
One thing to consider, with the trillions of dollars stashed in offshore accounts, the massive corporations paying, effectively, no taxes... could a portion of this money (if brought back in and taxed) be used to subsidize small businesses in order to do this more effectively? I have known people who have been working the same "dead end" jobs for over a decade and still earn minimum wage, which, in Maine, is 7.50 an hour. A lot of employers pay 8, so they can say, "See! I don't pay them minimum wage!" What they often neglect to mention is that they do not give raises. Period.
Perhaps that's a bad idea, I'm no economist, but I do think there is a genuine concern for some small businesses and employers who are barely hanging on. They will be too small to continue in an age where we bail out too big to fail.
Kip Humphrey
(4,753 posts)William Seger
(10,742 posts)1. Minimum-wage earners are also consumers: Virtually everything they earn goes right back into the economy. If McDonalds and Walmart both raise wages, McDonalds employees have more to spend at Walmart, and Walmart employees can buy McDonalds burgers a little more often.
2. The economy is not a zero sum game: New wealth is created when goods and services are sold for more than they cost to produce, but that process only works if people can actually afford to buy the goods and services. The whole problem with Reagan's supply-side economics was that we didn't (and still don't) have a supply-side problem. The idea that rich people would create more jobs if they had more money is abject nonsense. People (rich and poor) create jobs whenever there is a market for those goods and services, and rational people don't create jobs in the face of shrinking markets.
Kip Humphrey
(4,753 posts)procon
(15,805 posts)This increased buying power for workers is what gave us a solid middle class and made average Americans the envy of the world.
LisaM
(27,762 posts)I was just thinking about this today. What if it's, say, a small town bookstore, and now they have to summarily implement these cost increases? How do they compete with a company like Amazon that can then just keep their warehouses in states that don't have as high wages and can hire people for $5 less an hour to go pick books off the shelf? Small town bookstore might have to raise their book prices slightly; I for one would be happy to pay a little more, but I know a lot of people who seem to shop for things like books ONLY by price and wouldn't.
I do think minimum wage is stagnant and needs to be raised, but in a state like New York, the business climate varies between NYC and the rest of the state. Can't we support staggered or weighted increases (and maybe some more, actually a LOT more, protection for the other expenses small business owners face?)
Believe me, I really do want minimum wage increased. I just think we need to be very careful not to drive really small businesses under.
davidthegnome
(2,983 posts)Why hire someone in a place with a 15 minimum wage if you can do it somewhere for 8, or 10? Some jobs need to be "at location", but more and more can be done remotely with every passing year.
On a larger scale - if we consider the "global economy"... so many other Countries where labor is outsourced, that can pay far less, don't have to offer benefits, pay unemployment insurance, or anything else. The jobs that really just can't be outsourced remain, but as technology improves, so does one's ability to work overseas for an American company or individual. It's tough to compete in a global economy, especially when our businesses, tax system, corporations, financial institutions, etc... have such poor regulation and oversight. Not just that, but while our standards of living are not what they once were (and no longer at the top of the list in regards to ranking) what regulations and protections we do have contribute to this as much as those we lack. Checks and balances... someone forgot to put them in there.
What I mean is basically this: If we are going to increase wages, improve benefits and so on... we need to have some kinds of incentives and/or subsidies/controls that prevent companies, large or small, from saying, "Okay, screw you, we'll just go buy a factory hire workers in <insert cheap labor Country>". This simply isn't being done effectively enough. Maybe what it will come down to is making many of the larger corporations public, breaking them up, etc... but the problems will remain until we fix the root.
Free market fails for several reasons, but ranking pretty highly among them is the fact that some Countries really don't give much of a damn about how their workers live or work. Ultimately, it comes down to a simple numbers game... save more money, increase profits, by closing shops and factories here, and installing them in China, India, Pakistan, etc. If we think that the average employer, corporation, or individual... is more concerned with the common good than with profit (some are, but these are the exceptions, not the rule)? Then we should all be buying bridges in New York.
I want the minimums increased too, but agree that it needs to be done carefully, with consideration for numerous different perspectives. I spent many years working for minimum wage or slightly better, I am up to my eyeballs in debt and have no options as for going back to school to complete my education. Heck, I don't even have health insurance. Thanks to a back injury I'm now also unemployed and at least temporarily disabled - but, thanks to my State's great republican leadership... no benefits, no kind of safety net that catches me - aside from my family, for which I thank the Universe.
I think we can and should raise the minimum wage to a living wage, but it needs to be done in an intelligent manner. Again, I'm no economist, there are a great many people here smarter and better educated than I am - and I hope one of them will enlighten me.
LisaM
(27,762 posts)and people don't blink an eye, still order everything online. We all know the benefits of shopping locally, how much more money it keeps at home, versus buying from the big box or from Amazon. Yet I see my apartment lobby cluttered with Amazon prime boxes every day.
I do support a minimum wage increase, but we as consumers have to support it too, by shopping at the businesses who want to or have to put it into effect.
djg21
(1,803 posts)Some thought and discussion about having a range of "minimum" wages. I don't know if there is a justification for paying $15/HR to the 16 year old scooping ice-cream after school, or the youth who needs a summer job to offset college expenses. On the otherhand, the minimum wage for full-time unskilled workers should amount to a sustainable living wage. There is no easy answer to this question.
RoccoR5955
(12,471 posts)Why should this time be any different.
I am nearly 61, and have heard this every single time that there was ANY proposal to raise the minimum wage.
Wanna know what happened? Not a damn thing. Not one of them had less business, and eventually came to like the fact that they had more customers who could afford to shop more.
alcibiades_mystery
(36,437 posts)Ah, yes. Good times.
RoccoR5955
(12,471 posts)They just complain, and hope to get their damn way. To them it's all about greed.
jmowreader
(50,453 posts)Right now the minimum wage in New York state is $9 per hour. The normal minimum wage increase is 50 to 75 cents per hour. You have to sharpen your pencil a little better to accommodate it, but everyone does. But jeeze, a $6 increase? That will cause a LOT of damage.
NYC Liberal
(20,132 posts)over the past 30 years to keep up with cost of living and inflation.
But they kept opposing even those small 50-75 cent increases.
So now wages have become stagnant and have not kept up with cost of living. They need to be adjusted.
These business owners have only themselves to blame now.
JGug1
(320 posts)" You have to sharpen your pencil a little better to accommodate it, but everyone does. But jeeze, a $6 increase? That will cause a LOT of damage." The concern is that damage would be done to the economy in the form of lost jobs. Personally, while $6.00 is scary, I do not think that real damage would be done at all. In fact, the relative large influx of spendable income would probably make the cash registers light up.
Response to JGug1 (Reply #22)
RoccoR5955 This message was self-deleted by its author.
RoccoR5955
(12,471 posts)This will only generate more consumption, which will generate more income for small businesses, which will generate more production from industry, which will generate more jobs. This is ALWAYS the case.
When the minimum wage was $.40 in 1945 and it went up to $.75 in 1950, it almost doubled! What damage did it do then? None! The economy boomed after that.
So please don't give me that line, as it is simply historically untrue. Besides, minimum wage has not gone up in the US since 2009. that's seven years!
mountain grammy
(26,573 posts)if I couldn't afford to pay employees a decent wage, I'd do it myself, which I did for the first 2 years. When I could finally hire help, I paid $10/hr (1995-2000) well above minimum. Never had any problems hiring, and for the most part, I had good workers. Could not afford benefits, which really bothered me, but I worked towards it. Kept hoping our Democratic president would pass some kind of single payer health plan, but I'm still hoping.
AlbertCat
(17,505 posts)I've never owned a business, but I would think that if your BUSINESS is of paramount importance, instead of insisting your workers take less, you, as the owner, would sacrifice 1st. After all, it is YOUR business.
But of course things depend on many factors....different for each business.
jmowreader
(50,453 posts)Are you a "former small business owner" or a person who's never owned a business? It's hard to tell from your post.
Several of my pressmen and at least one of my ad designers are small business owners. (Our ad design supervisor also owns a business but she doesn't work in it.) A couple of them have handyman companies, one owns a store, one has a small farm...they all have employees and they all take an active role in the operation of their companies, but to keep the home fires burning they work 8 to 10 hours a day at someone else's company. If any of them get more than four or five hours' sleep a night I'd be stunned, but that's what they have to do to fulfill the American Dream. And this is repeated all over the country. Exactly how much sacrifice would you like?
AlbertCat
(17,505 posts)Not if you look at the post I'm replying to.
"Exactly how much sacrifice would you like?"
Oh...I dunno.... Enough to pay their workers a living wage?
jmowreader
(50,453 posts)AlbertCat
(17,505 posts)Can't you get a loan?
No you don't "got" nothin'. But I see you're fine with not raising the minimum wage to a living wage.
jmowreader
(50,453 posts)You can't run your business at a loss forever. If you keep borrowing money to make payroll, eventually the bank is going to close you down.
Let's play with this. You run a plumbing supply company that's bringing $20K/month through the front door and has four employees who make $9 per hour. "Hey cool! We make $240,000 per year! Fat city!" Well...not really. After all expenses are paid and before you take a nickel out of the store, you have a 10 percent profit margin. Let's see now...ten percent of $20,000 is $2000 a month. If you decided to hand all of it over to the employees because you're such a fine individual you'll work for free, each employee will receive $500 per month extra. In a standard 160-hour work month, that comes out to an extra $3.12 per hour. Going from $9 to $15 means you need an extra three bucks an hour you do not have.
"With all the extra money everyone's going to be bringing in, you can afford to raise their pay!" This is why I made you run a plumbing supply company instead of something fun. A plumbing supply company isn't going to see a huge inrush of new business...because either you need pipe or you don't, and raising the minimum wage a few bucks an hour is not going to result in massive homebuilding and underground sprinkler installation surges.
"Well, why can't you raise your prices?" To increase your employees' pay from $9 to $15 you need an extra $3840 per month. To make the books balance you need to raise prices 20 percent - which will cause massive customer defection to Home Depot and Lowe's, both of whom heavily understaff their stores.
There would be only one way to make $15 work in your store, and I've been saying this all along. A $9 per hour employee costs you $13.50 per hour because of taxes, unemployment insurance, and benefits. Or, on a 160-hour month, each person costs you $2160, or $8640 per month for labor. But reducing staff to two $15 employees ($22.50 per hour total cost) or cutting your four guys down to 20 hours per week will give you labor cost of $7200 per month.
Which is better? Four employees living in families where both spouses work...or two employees completely out of jobs?
(For S&G let's throw Hillary's $12 into the mix...employee cost $18 per hour or $2880 per month, total labor cost $11,520 per month...if you put a tie on your most-extroverted employee and converted him into an outside sales person, you might be able to find an extra $3000.)
I understand the need to make the minimum wage a living wage...but at the same time I also understand the need to not bankrupt the small business community.
mountain grammy
(26,573 posts)and, as a former small business owner, I was never rich. The sacrifices were huge, but my employees were paid well. I couldn't pay people minimum wage and look them in the eye.
mountain grammy
(26,573 posts)JGug1
(320 posts)"They say the wage increase would devastate the state's economy by raising prices and reducing employment."
The data from places where increased minimum wage has been implemented does not support what the small businesses are asserting. In fact, it supports exactly the opposite. They are being foolish. Hopefully, the legislature will ignore them. It would be HUGE.
Vinca
(50,172 posts)When I hear "small business," I think of a mom and pop store or the local diner. The government views it differently. You can have as many as 1,500 employees and still be considered a "small business." Things are not always what they seem to be.
WhoWoodaKnew
(847 posts)and bill his work at $110/hour. He's not full time.
Now, when I started my company almost 30 years ago, I was working 16 hours a day (by myself) and charging $49/hour (and barely stayed in business). I thought many times about giving up and going back to work for someone else.
People just don't understand what it takes until they actually own/run a small business. It's everything that almost kills you (doing your own job plus being everything else: janitor, accountant, human resources, computer tech, marketing director, customer service rep, research and development, salesman, etc).
And you simply need to do all that with little to no sleep for around a decade (while fighting off your competitors).
RoccoR5955
(12,471 posts)WhoWoodaKnew
(847 posts)I admit that I laugh when people talk about starting/running a small business (when many have no clue). Having been raised in a family whose parents started one as well, I knew what it was going to take.
Now, 8 out of 10 small businesses fail within the first 18 months. There is a reason for that. It's friggin hard. I'm one of the lucky ones.
madokie
(51,076 posts)When working people make more money they almost always spend it which will increase demand which will increase jobs
jmowreader
(50,453 posts)If the wage hikes exponentially raise the price of the goods and services these working people purchase, then they will be able to afford the same amount of goods and services as they did before. Then what ? Start the campaign for another living-wage minimum wage as no ground was gained except the tax coffers relying on increased taxes on the increased wages through workers hitting a higher tax bracket ? There's a reason why it takes $10 to buy what cost $1.00 years ago. I don't know, it still looks like a circular firing squad IMO.
maxsolomon
(32,992 posts)you don't want to get too close to a slippery slope!
mountain grammy
(26,573 posts)for any kind of real effect on inflation. It's been far too long since the wage was raised. It was stuck at $5.15 for 10 years until it was finally raised in 2007 and now it's stuck again while everything goes up. People already spend well over half their income just for housing. A raise in minimum wage now would just increase people's ability to buy necessities.
maxsolomon
(32,992 posts)but everyone screamed like stuck pigs when it passed. exact same predictions of doom.
this is long past due. if it had been implemented all along and not blocked by the fucking GOP, then it would be near $15 anyway.
RoccoR5955
(12,471 posts)We heard the same complaints as today. That was nearly DOUBLE. And the economy boomed!
Le Taz Hot
(22,271 posts)you shouldn't be in business.
mountain grammy
(26,573 posts)Doctor Who
(147 posts)A living wage for a family of two? Four? Six? I can't afford to pay your unskilled labor position enough for you to support your spouse and four kids so I'm gonna close my business.. Said no business owner ever. I'm an electrician, when I bring on a first year apprentice, they start at $9 an hour. They get a dollar raise each year they are working for me. Your rate of pay is based on what value you bring to the business, not what you need to support your family. The idea that a new hire at a fast food joint should be making a wage comparable to a skilled trade worker is silly. My niece who is 17 works in an ice cream shop, should they be paying her "enough" to support a family?
Throd
(7,208 posts)My first few jobs did not pay a "living wage" because they required zero skills whatsoever.
Nye Bevan
(25,406 posts)and electronic terminals for ordering fast food. Technology will mitigate the impact of a sudden dramatic increase in the cost of human labor.
HughBeaumont
(24,461 posts)Your choice, owners.
Machines or consumers with disposable incomes.
Keep that wage at a buying power LOSS or raise it so people can afford your products.
Thats because you forgot that your workers are also consumers. As youve pushed wages downward, youve also squeezed your customers so tight they can hardly afford to buy what you have to sell.
Consumer spending comprises 70 percent of the American economy. But the typical family is earning less today than it did in 2000, in terms of real purchasing power.
Most of the economic gains have gone to you and others like you who spend only a small fraction of what they rake in. That spells trouble for the economy and for you.
snip
Finally, by squeezing wages and rigging the economic game in your favor, you have invited an unprecedented political backlash against trade, immigration, globalization, and even against the establishment itself.
The pent-up angers and frustrations of millions of Americans who are working harder than ever yet getting nowhere, and who feel more economically insecure than ever, have finally erupted. American politics has become a cesspool of vitriol.
snip
You forgot the values of a former generation of Republican establishment that witnessed the devastations of the Great Depression and World War II, and who helped build the great post-war American middle class.
That generation did not act mainly out of generosity or social responsibility. They understood, correctly, that broad-based prosperity would be good for them and their businesses over the long term.
TexasBushwhacker
(20,044 posts)to anyone? They aren't going to suddenly double the minimum wage in one fell swoop. They could raise it 16% a year for 5 years. Thereafter it should be indexed to inflation and go up every year.
The thing is, a person making $7.25 an hour will take home less than $1200 a month. If they are single without children they won't qualify for SNAP or EITC. If they don't live in a state that expanded Medicaid, they may not qualify for that either.
If they have one or more children, they will qualify for SNAP, EITC and other benefits courtesy of Joe and Joann Taxpayer. So the question is, how much should the taxpayers have to subsidize the employers who pay poverty level wages? And which jobs should a person working full time still live in poverty?
FWIW, I would be fine with paying anyone under a certain age (18, 19, 20?) less than $15 an hour. I wouldn't want a kid in high school to drop out because they could make a living wage.